The dispute between the Metropolitan Opera and 15 of its unions masks a bigger problem — one that city government shares.
Just like its opera, New York itself is dangerously dependent on the top 1 percent of New Yorkers for its spending power — and the rich don't have infinite ability to rescue management or labor from their mistakes.
The Met isn't just a great opera, but a union shop — the only American house that carries a full-time opera, chorus and stage staff. Of its 1,600 workers, 77 percent are unionized.
The Met does a lot for its union labor force. If you work for 30 years, you get 60 percent of your pay as a pension for life — something that's unsustainable as pay reaches $200,000 a year. You get health care without paying a premium.
Such perks are more like what's on offer at the Department of Education or the Long Island Rail Road than at a private business. The orchestra gets 16 weeks' paid vacation, and performers get an extra fee to change their shoes.
That's why two-thirds of the Met budget is for union pay and benefits. How could opera have afforded this stuff for so long?
Actually, it hasn't afforded it. The Met had a $68.4 million pension deficit as of last year. It's also running operating deficits — nearly $3 million of a $327 million budget.
Yes, that's less than 1 percent. But that's after taking desperate measures. The Met pulled nearly $21 million out of its long-term investment fund last year to pay operating expenses — and two years ago, it borrowed $100 million long-term from bondholders, partly to meet operating expenses.
Fact is, the Met has enjoyed an expensive evening away from reality. For years, it acted as if its rich patrons' resources were infinite — people would always pay higher prices, and if that didn't work, donors would come up with the shortfall.
But people won't pay ever more for tickets. After the Met hiked prices by 17 percent (after inflation) starting in 2008, attendance plummeted 14 percent.
As the unions say, “This should not be a surprising correlation. Lowering ticket prices brings people in. Raising ticket prices drives them away!”
A decade ago, opera-goers provided 38 percent of the budget. Now, it's just 27 percent.
Consider: 53 percent of the Met's audience earns less than $100,000. Add parking, tolls, dinner and a babysitter to opera tickets (only 24 percent of the audience lives in Manhattan), and your bill for the night can be more like four figures than three.
That leaves the Met more dependent on rich donors — but they've balked at covering the endless deficits.
So the Met is proposing changes to work rules, cutting pensions to 40 percent of salary (although people can keep what they've already earned toward their pensions) and asking workers to negotiate on health care.
The unions' argument is that their members do an excellent job of putting on operas — and since management is responsible for flops, management should pay, not labor.
Yeah, the Met puts on some clunkers. But producers are supposed to take risks. Most Broadway plays fail, too.
Anyway, it doesn't really matter who's right. An opera performer may be worth $200,000 a year — but if her employer can't find anyone to pay, she's not going to get it.
That's why, despite the drama, the Met's unions have an incentive to make a deal rather than face a lock-out. The Met can go bankrupt, as the City Opera did a year ago.
The city should take a lesson. Like the Met, Gotham depends on rich people. The top 1 percent pay 46 percent of the city's income-tax take.
Their willingness to pay higher taxes — whether for management flops like the CityTime boondoggle, or unsustainable labor costs — isn't inexhaustible.
The middle class — like operagoers who earn under six figures — can't pay ever-higher sales and income taxes, either.
Yet the city, unlike the Met, is still pretending that everything is fine.
Last week, state Comptroller Tom DiNapoli and city Comptroller Scott Stringer applauded Mayor de Blasio's song and dance about his maiden budget being balanced — though it pushes billions of dollars of spending for past work into the future.
New York is a rich city. But if the tuxedoed folk balk at paying for something that's fun, how will they feel about paying more for everything else?
Original Source: http://nypost.com/2014/08/03/the-mets-fiscal-tragicomedy-when-the-1-stop-giving/